Should You Put Your SMSF Money Into Real Estate?

Australians were required to put money down in the form of contributions in 1992 when the Keating Labour Government implemented the compulsory employer contribution scheme. In recent years, an increasing number of Australians have increased the aggressiveness of their retirement planning while also seizing direct control of their retirement resources by establishing SMSFs. The degree of SMSF property investment has increased by over 31% just in the last five years. SMSFs now account for 29% of the $2.1 trillion overall superannuation pool, according to the Australian Taxation Office (ATO).

You have more control over your investments when you self-manage your superannuation, and you also have tax advantages that big industry providers do not. However, SMSFs mandate that you create and carry out an investing strategy that you must oversee independently and periodically. Simply put, selecting an SMSF investment strategy signifies that you are in control.

Can Someone Purchase a Home With a Self-Managed Super Fund (SMSF)?

Investment properties may be purchased using SMSFs. Australians have grown increasingly accustomed to this expanding trend in recent years. Comparatively speaking, investing in real estate through SMSFs is a low-risk, reasonably stable alternative that can yield sizable returns. More importantly, compared to other options, you have more control over your real estate investment, and you may even be able to achieve significant tax savings.

You can buy a singular asset or a group of related assets with similar marketplace value by using your self-managed fund and borrowing money. The exact procedure whereby SMSF trustees obtain loans from third-party lenders is the Limited Recourse Borrowing Arrangement (LRBA). The trustee uses the money to buy a singular asset (or a group of related assets with similar marketplace value) to be kept in a different trust. If a loan defaults under an LRBA, the lender’s options are restricted to the asset owned by the separate trust. The entire superfund is not in danger.

It’s vital to understand that not everyone should use an SMSF to buy a property. This investment approach might be considered thanks to a few crucial factors. Trustees can administer their fund and investment plan in various ways, even if there is no set formula to follow.

What Kind of Property Should You Purchase With Your SMSF?

Using an SMSF to purchase a home

Residential investments through your SMSF can take the shape of established homes and apartments, land-and-house packages, dual-key properties, and serviced apartments. Alternatively, they can take the form of commercial properties (retail spaces, offices, factories). Property alternatives for homes and businesses each have their advantages and disadvantages. You can earn excellent profits and some of the best tax breaks by investing in real estate through your SMSF with an adequately optimised loan structure.

Using an SMSF for business purchases

Buying commercial real estate to lease back through a business is more frequently done using an SMSF. Due to longer leases and greater yields, commercial properties often provide more advantageous rental returns than residential assets. Members of an SMSF may sell or lease commercial real estate to the trustees of the SMSF or a person or company connected to them. There are many elements to consider while holding commercial property in an SMSF.


If you want to establish your SMSF property investment, having a carefully thought-out investing strategy is essential. It does not imply that you will be doing everything yourself, though. The most excellent choice you could make is to seek professional guidance to handle your super fund. Building your investment portfolio and making your money work for you are two areas in which financial counsellors specialise.

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